HP’s Immaterial Move

HP is spinning off their hardware business and shutting down their WebOS products. It’s hard to interpret this in a way that matters to anyone not directly involved: for the web, Apple is still the macro situation. Everything else, including HP, is comparatively commoditized.

TechCrunch says that Apple beat them, but that’s not really accurate. The nature of their business beat them; Apple is basically in a different business.

Why is Price Discrimination a Mystery?

Basically, this blogger has discovered that AT&T is pricing text messages based on how much they think consumers will pay for them, not based on their marginal cost.

Of course they are. People are in the habit of sending and receiving texts. Even people who don’t use them treat errant texts as a cost of doing business. In practice, nobody is upset by this; in principle, nearly everyone is.

AT&T spends $15bn to $20bn per year in capital expenditures. Their whole business model is to make massive capital investments in order to have extremely low marginal costs, and then to label and mark up those marginal costs in order to amortize their expenses. It’s analogous to arguing that restaurants provide ambiance and food for free, but then charge you way too much money for presenting you with a bill.

It’s amazing that this kind of post generates pageviews.

Web Usability Held Back by Web Users

90% of people don’t know how to use ctrl-F to find a word or phrase in a document. This explains two related phenomena: the persistence of “Above the fold / Below the fold” reasoning, and the continuing success of long-form sales letters. Sales letters are designed to dump lots of information on readers; there’s nothing in particular to look for. And readers who don’t know how to search for what they’re looking for are likely to bounce if what they’re looking for isn’t above the fold.

Apparently the state of searching for pages is far more advanced than the state of searching within them. Perhaps Google can use Chrome to start training average web surfers

Twitter Solves the Tweet-Referral Problem

Twitter’s new link-shortener now reveals where Tweets came from. For larger sites with extensive social media followings, this is a big deal: it means that sites will be able to fine-tune their social media outreach in order to focus on people who actually generate clicks.

For sites like TechCrunch and Mashable, the median number of clicks per tweet is zero: there are a few tweets from actual people, and plenty more from robots. This should go a long way towards evening up different assessments of those sites’ popularity.

Commentariat Giving Up on Google+

The fact is, very few people have room to manage many multiple social networks. Yes, you might have someone who is an active poster on Reddit, an avid user of Facebook and a dedicated World of Warcraft player, but that’s approaching the maximum online presence limit as is, since there is only so much time in the day to waste on the internet. Add in Google Plus, effectively a duplicate of Facebook, and there just isn’t space for it.

Their flaw illustrates what other social networks have done right: start with 100% market share, then redefine your market. Google+ did this, in a way, since it started as an in-house social network. But there aren’t many natural expansion channels that take a site from Google-only to ubiquitous. Facebook could get gradually less elitist and then less youthful; MySpace could gradually target a more mainstream music audience. But Google’s ability to scale up data-driven products doesn’t apply to social products, where excessive scale means that the online social network doesn’t reflect real-world social networks. Facebook’s “network of networks” strategy wasn’t just a smart way to keep the size of their databases manageable; it might have been the only way for Facebook to succeed like it has.

Groupon’s Negative Working Capital Issues

Groupon needs to raise money. Mostly for PR purposes. Their model generates lots of upfront cash, which is another way of saying that as they grow, they accumulate liabilities. It’s true that Groupon will be cash-flow negative if their growth merely slows down, but this is a concern that their management is well aware of. Companies like Amazon used to fund themselves in a similar way: they’d get paid upfront, pay out later, and turn over their inventory fast.

Another way to respond to this critique: Groupon could have theoretically solved this problem by adopting faster payment plans for merchants. That would make theirs a worse business with lower cash flow, but it would help their PR (and perhaps their valuation). It’s counterintuitive that Groupon could make their business worse but make their valuation better—it depends on whether their share price is, at the margin, determined by the skeptics or the believers.

A Local News Renaissance?

Mid-sized content sites continue to perform oddly well. Capital New York has just raised a small round and hired some ex-Observer writers. Capital is a fine product, and worth reading, but it looks more like a vanity investment than a real business. That’s fine: vanity investments in media have produced some of the world’s best journalism.